All Forum Posts by: Jose Aguilar

@Jose Aguilar 

Yes, there are extra health and safety issues that need to be inspected, however it sounds like your lender is inexperienced in this loan product and being kind of lazy, in my opinion. It's really not that big of a deal for both your agent and lender to deal with an FHA loan as long as they feel confident in their ability to operate through the guidelines.

As long as the property is not thrashed, you will be just fine.

I know that when our market was really hot it was harder to get FHA loans accepted, but we still got FHA offers accepted often. especially now with the market slowing down a bit its way easier to get them accepted. If it makes more sense to do FHA because its only 3.5% down and that's best for you tell your lender that. The hoops that the sellers have to jump through for FHA are just in the conditions of the house. FHA requires that there is no peeling paint on the property, there has to be a certain amount of years left on the roof (I don't remember how many though), no major hazards.

Your realtor where you live should have a pretty good idea of what things the Appraiser would call out and ask for the seller to fix those before the house got appraised. shouldn't be too big of an issue unless your looking at houses that are in need of major remodels before they are livable.

again my Area is most likely a little different than yours and your agent should be knowledgeable. 

Do you have a realtor you are using where your living?

I am located in Central California. As far as where I am at right now, I have not been in contact with any realtors because I would like to broaden my knowledge on the different loans to see what best fits my situation. I have some time on my hands to conduct research while working so im looking to plan out my strategy. 

hi @Jose Aguilar!

FHA is typically more stringent on property quality and condition. I've had FHA appraisers give us a hard time over chipping paint, or silly "health and safety" issues like a cracked step up to the house (trip hazard). You'll have a much easier time with conventional financing just on the property itself if you intend to find something that allows for value-add.

A note on sellers accepting FHA offers.... over 2020 and 2021, we saw most govy offers (FHA and VA) be put at the bottom of the pile for sellers. This is mainly because of the Amendatory Clause. Basically this states that if the property does not appraise for the offer price, the buyer (on an FHA or VA loan) can walk away from the transaction, and is entitled to their EMD back. Sellers at that time did not like this, especially when they were getting signed agreements from other buyers offering sometimes $100k over appraised value.

now, in 2022, with things slowing down, FHA/ VA is not looked at as a black-eye as muchhhh as it was the last couple of years, but FHA also kind of has a stigma of being associated with less-qualified buyers. they allow for lower credit scores, higher DTI's, lower down payments.... its a psychological thing.

if you have the ability to do 5% down instead of the FHA minimum of 3.5% down, you'll end up in an overall better loan (less mortgage insurance) with a lower payment. plus, FHA eats up 1.75% of your equity just off the bat with the up-front mortgage insurance that conventional financing does not have.

Dont get discouraged whichever way you decide to go. But i also typically will recommend conventional if its feasible and if its in the best interest of the client (which it usually is). 

@Jose Aguilar
Some markets may not support having the tenants pay all your mortgage because the prices are too high compared to rents.  

I would first get pre approved so you have an idea on your monthly payment and closing costs. For this duplex it doesn't sound like the 1 tenant would cover the mortgage. For a house hack that's okay. The benefit is lower living expenses, once you move out positive cashflow and getting your foot in the door of owning real estate.